The publisher added 301,000 digital subscribers for the first quarter, the slowest gain in over a year. Profits jumped, beating Wall Street expectations.
No doubt, President Biden has lowered the temperature of the nation after four years under Donald J. Trump, a tumultuous period capped by the worst pandemic in a century. He may have also lowered interest in the news. For the first quarter, The New York Times Company recorded its smallest gain in new subscribers in a year and a half.
The Times reported a total of 7.8 million subscribers across both print and digital platforms, with 6.9 million coming for online news or its Cooking and Games apps. The company added 301,000 digital customers for the first three months of the year, the lowest increase since the third quarter of 2019.
The Times is still on a path to reach its goal of 10 million subscribers by 2025, and it has improved its profit margins as its digital business — which costs less than print — continues to rise.
The company reported adjusted operating profit of $68 million, a 54 percent jump from last year, as it generated more dollars from each subscriber, partly because of the expiration of promotional rates as the new year rolled over. Total revenue rose modestly, about 6.6 percent, to $473 million. Online subscriptions and digital advertising together rose 32 percent, to $239 million, and the print business continued its steady decline.
For the first time, the company announced the number of readers it calls registered users — 100 million. Registered users can read a limited number of free articles before being asked to pay.
The Times sees another opportunity to convert people into paying readers in its cache of newsletter subscribers. About 15 million people read one of the paper’s many newsletters each week. About five million read The Morning, the flagship newsletter, daily.
In a statement announcing the earnings report, Meredith Kopit Levien, the chief executive, said the company’s large user base “grounds our conviction that we can substantially and profitably scale paid subscriptions over time.”
The Times met expectations for subscription sales, which rose 15 percent to $329 million; digital subscriptions vaulted 38 percent to $179.6 million. The surprise came from advertising, which fell 8.5 percent to $97 million. The company had expected double that decline.
There was an unexpected bump during the quarter in digital advertising as revenue increased 16.3 percent to $59.5 million, largely from more direct sales of display banners and podcast commercials.
The increase is also tied to The Times’s trove of first-party data. The company can harness its database of subscribers to target ads. That means it doesn’t rely on third-party tracking software, which has fallen out of favor as privacy concerns mount. Apple, for example, just updated its software to make it harder to track users across apps on its iPhones, a change that does not affect The Times’s ad business.
Operating costs rose slightly, to $421.4 million, an increase of a little more than 1 percent over last year. The company spent less on travel and entertainment expenses because of the pandemic, but it has hired more people. General and administrative costs rose 7 percent, to $56.6 million.
For the current quarter, The Times expects subscription revenues to increase 15 percent from last year. Revenue from digital subscribers is likely to rise 30 percent, the company said. That would be a slowdown from 2020, when The Times had a sharp gain in readership. It was one of the heaviest news cycles in recent memory, as the country was battered by the coronavirus pandemic, saw the rise of a social justice movement after the killing of George Floyd and voted in a hotly contested presidential election.
On an investor call after the earnings announcement, Ms. Levien said 2020 was a year that saw “unprecedented demand for Times journalism.” This year’s subscriber growth will therefore be relatively lower. At the same time, “we are very confident there’s wide interest in news,” she added. “I don’t think the world is getting any less interesting. I don’t think it’s getting any less complex.”
Advertising is expected to pick up mightily. The company estimates a 55 percent to 60 percent jump from last year, when ad spending was severely curtailed because of the pandemic. Digital advertising is likely to rise even more, at 70 percent to 75 percent.
Costs are also expected to increase as the company plans to spend more marketing dollars to attract new subscribers. Capital spending should reach as much as $50 million this quarter.
The company has gotten bigger as it invests in podcasts, television and film development. Total audio listeners, including for “The Daily,” grew 30 percent in the first quarter from a year earlier, largely from the addition of new podcasts.
The Times is in negotiations with the NewsGuild, the union that represents about 1,400 newsroom employees. The union seeks increased salaries and benefits, as well as a better defined structure for improving diversity and inclusion. A new deal could result in higher costs for the company.
In April, the NewsGuild asked The Times to recognize a newly formed union of tech and digital employees. In an email sent to the staff April 22, Ms. Levien effectively declined, saying employees should hold a formal vote. Union representatives replied that they had already voted when a majority of tech employees signed union cards.
The company’s cash pile remains high, at more than $890 million, and its free cash flow — a measure of a company’s financial heft — has risen steadily over the last three years. In 2020, it averaged about $65 million in free cash flow each quarter, according to data compiled by S&P Capital IQ.
The Times has also increased dividend payouts to shareholders every few years. It now pays 7 cents a share each quarter, which costs about $46.8 million a year, payments that benefit the Ochs-Sulzberger family, which controls The Times.
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May 05, 2021 at 06:13PM
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New York Times Q1 2021 Earnings - The New York Times
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